Pfizer says the time is right for Wyeth deal
The CEO said his team had made changes for a careful integration. Still, analysts are split on its success.
TRENTON - Eager to dispel doubts on executing Pfizer Inc.'s $68 billion tie-up with Wyeth, Pfizer's chief executive officer said it would be done more like microsurgery than just stitching two huge corporations together.
Jeffrey Kindler has spent two years transforming Pfizer into smaller, entrepreneurial research and marketing business units, making the companies easier to combine, he said in his first in-depth interview since the deal was unveiled Jan. 26.
"We could not have done a deal like this a year ago," Kindler said. "The company wasn't strong enough yet. We had to get our cost structure in line," bring in the right leaders, and reduce bureaucracy.
Kindler, 53, a Harvard Law graduate and former McDonald's Corp. executive, said his team made changes faster than anticipated.
The need for speed was obvious, with more than a quarter of revenue coming from the cholesterol fighter Lipitor, the world's best-selling drug. Generic competition will slash its $13 billion in annual sales soon after its patent expires in November 2011.
Like competitors, New York-based Pfizer has been eliminating jobs; it just began another round of nearly 8,200 cuts. The knife will come out again after the Wyeth deal is completed late this year.
Kindler is working with Wyeth's CEO, Bernard Poussot, who is staying on through the transition to help with decisions about which workers and research programs remain, and what happens to specific facilities, including Wyeth's posh campus in Madison, N.J., as well as facilities in Collegeville and Malvern that employ about 5,000.
The recent changes give him "confidence that we're going to be able to integrate this transaction much more effectively and much more quickly than was done in the past," Kindler said.
Two previous mega-acquisitions dragged out but helped Pfizer leapfrog to the world's biggest drugmaker: buying Warner-Lambert Co. in 2001 and Pharmacia Inc. in 2003.
Analysts are split on how the marriage with Wyeth will work out, but nearly all agree it will solve Pfizer's short-term problem of revenue-crashing in 2012.
Adding Wyeth's products, including the blockbuster biologic arthritis treatment Enbrel and a host of consumer health products and veterinary medicines, will quickly boost Pfizer's revenue about 50 percent, and profit could rise with cost cuts.
Some analysts see the deal as proof Kindler's predecessor, Hank McKinnell, erred in deciding to sell its profitable consumer health unit in 2006 to focus on prescription drugs.
"Decisions that were made in the past were made for the right reasons," Kindler said, and I'm looking at the environment that we're in today and . . . the foreseeable future. This is the right thing for us to do at this time."